How Asia Is Reinventing Itself for Global Competition

Our strategists Daniel Blake and Tim Chan discuss how Asia is adapting to multipolar world dynamics, tech innovation and longevity trends to create new opportunities for global investors.

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Daniel Blake: Welcome to Thoughts on the Market. I'm Daniel Blake, Morgan Stanley's Asia Equity and Thematic Strategist. 

Tim Chan: And I'm Tim Chan, Morgan Stanley Head of Asia Sustainability Research and Thematic Strategist 

Daniel Blake: Today, how Asia is reshaping its development strategy, corporate governance, and capital markets to lead globally. 

It's Monday, October 6th at 8am in Singapore. 

Tim Chan: And it's also 8am in Hong Kong. 

Daniel Blake: Asia is experiencing a number of dramatic changes that are reshaping industries, even entire economies. Deglobalization, supply chain shifts, frenetic investment in AI and looming disruption from the adoption of the technology, rapid energy transformation, and the transition to super aged populations as longevity drives investment in innovative healthcare and better nutrition are just some of the overarching themes. Asia's transformation is a story every global investor needs to follow and look for opportunities in. 

Tim Chan: So, what are the overarching themes, when you look at Asia Pacific? For example, what are the key themes that you're seeing in terms of driving the equity return and the market trend that you're seeing? 

Daniel Blake: We're approaching the Asia thematic opportunity from the framework of a competitive reinvention. It's competitive because this is deeply rooted in the cultural and business norms across much of the region, which has had an export focus through the modernization process in Japan, and more broadly with the emergence of the Asia Tigers. 

But we're seeing this competition really stepping up another notch. As countries look at how they can take market share in emerging technologies, and also this overarching competition between the U.S. and China, which sits at the heart of the multipolar world theme we've been laying out in recent years. 

We're also seeing a reinvention of development strategies of corporate governance frameworks and of capital markets to try to better improve the financial supply chain, to see the capital raising the capital allocation process improved and ultimately drive better returns for an aging population. 

So, Tim, you've been very focused on the corporate governance improvements that were seen in much of the region. Take us through what you think is most compelling and most important for investors to note. 

Tim Chan: I think governance reforms is a really key thing for Asia Pacific. Take an example in Japan, in the past we have done some correlation analysis between the major governance factors and what are driving the return. What we have found is that, first of all, there is a significant alpha potential from online companies with leading governance metrics and also companies that may improve their governance metrics over time. 

So, if we look at the independence of board of directors as an example. There is a positive correlation between the total return and also the independence in Japan market. And overall, we are seeing a major government improvement. As Daniel you have mentioned, China, Korea, India, and Singapore, and Japan as well – all these markets together account for over 70 percent of the market cap in MS Asia Pacific in index. So that's why, we think the governance reform is really driving the return of Asia Pacific as a whole. 

Daniel, after talking about the governance reform and capital market reform, I know multipolar level is also a key theme for Asia Pacific. So, what you are seeing in terms of multipolar level in Asia Pacific? 

Daniel Blake: So, the multipolar world theme has come back to the foreground in 2025 as trade tensions have risen, as deal making has been struck or attempted. And we've seen the concept of weaponized interdependence really being proven out in the second quarter of 2025, as China has been in recent years, implementing frameworks for export controls and leverage these quite effectively. 

So economic security initiatives have come back to the focus for investors. Over recent years, we've seen a number being set up across the region, including Japan's Economic Security Promotion Act, the Self-Reliant India framework, and South Korea's Supply Chain Stabiliz